The nationalisation of mortgage lender Bradford & Bingley has been confirmed by the Government.

The former building society's savings and branch business - which has £20 billion in deposits and 2.7 million customers - will be bought for £612 million by Santander, the Spanish bank that owns Abbey and has agreed to buy Alliance & Leicester.

With a total of 1,286 branches across the UK, Santander will have a 10% share of the retail savings market with the combined business of Abbey, Alliance & Leicester and B&B.

The Financial Services Compensation Scheme has paid out £14 billion - a loan funded by the Bank of England - to allow B&B's retail deposits to be transferred to Abbey, with a further £4 billion to be paid by the Treasury to cover those deposits not protected by the scheme.

The Treasury said it would be "business as usual" for savers and borrowers at B&B, with branches remaining open and call centres and internet banking also available.

The break-up marks the end for a business which can trace its roots back more than 150 years. The Financial Services Authority (FSA) decided on Saturday morning that B&B was not strong enough to continue as a deposit-taking business after the recent financial crisis undermined confidence in the bank.

Chancellor Alistair Darling told GMTV: "My priority was to protect savers and depositors but also to ensure we got a good deal for the taxpayer."

The Treasury said: "The Government, on the advice of the FSA and the Bank of England, acted immediately to maintain financial stability and protect depositors, while minimising the exposure to taxpayers."

B&B became a bank in 2000. It has around 3,000 staff and 197 branches, and was the last former building society to retain its independence after the nationalisation of Northern Rock in February and July's announced takeover of Alliance & Leicester.

B&B's shares have been cancelled, with compensation to be paid in "due course", the Government said.

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